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Goldman Sachs is one of the most highly respected investment banks out there.

Its analysts scour the globe for investment opportunities and then recommend them to investors.

While the broker has buy ratings on a number of ASX shares, it has a coveted list that is only for the crème de la crème.

That list is Goldman’s conviction list. In the Asia-Pacific region it currently contains 29 companies, with only four coming from the Australian share market.

One of those is cloud accounting platform provider Xero Ltd (ASX: XRO).

Why are Xero shares among the best in the Asia-Pacific region?

Goldman is feeling positive on the company due partly to its strong performance in FY 2024. The broker said:

Xero reported FY24 Sales/EBITDA +0.3%/+10% vs. GSe, while FY25 operating expense to revenue is expected to be 73% in FY25, in-line with GSe prior 72.6%. Rule of 40 exceeded (41%) and record EBIT margins delivered (2H24 of 21% vs. 10% in 1H24, 8% 2H23) as XRO benefits from strong revenue growth, cost controls and much lower than expected capex.

But the real reason to be positive is the company’s long-term outlook and huge market opportunity. Goldman highlights that with 4.16 million subscribers, Xero is only really scratching at the surface of its addressable market. This gives it a multi-decade runway for growth at a time when small businesses are digitising. It explains:

Xero is a Global Cloud Accounting SaaS player, with existing focuses in ANZ, UK, North American and SE Asian markets. We see Xero as very well-placed to take advantage of the digitisation of SMBs globally, driven by compelling efficiency benefits and regulatory tailwinds, with >100mn SMBs worldwide representing a >NZ$100bn TAM. Given the company’s pivot to profitable growth and corresponding faster earnings ramp, we see an attractive entry point into a global growth story with Xero our preferred large-cap technology name in ANZ – the stock is Buy rated.

Big return potential

According to the note, the broker currently has a conviction buy rating and $164.00 price target on Xero’s shares.

Based on its current share price of $130.94, this implies potential upside of 25.5% for investors over the next 12 months.

To put that in context, a $10,000 investment would turn into approximately $12,500 if Goldman is on the money with its recommendation.

All in all, it believes this makes Xero one of the best investment options in the whole Asia-Pacific region.

The post Why Xero could be one the best shares to buy in the Asia-Pacific appeared first on The Motley Fool Australia.

More reading

• Analysts say these 5 ASX 200 growth shares are top buys
• Top brokers name 3 ASX shares to buy next week
• Why Brainchip, Immutep, Liontown, and Xero shares are tumbling today
• Xero share price on watch amid $1.3 billion convertible notes offering
• 5 things to watch on the ASX 200 on Wednesday

Motley Fool contributor James Mickleboro has positions in Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group and Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Given the cost of living crisis, it’s probable that many readers don’t have as much in their savings accounts as they would like.

But don’t worry if that’s the case because history shows that it’s possible to build a meaningful nest egg by following in the footsteps of Warren Buffett. Even when starting from zero.

Especially if you follow the Oracle of Omaha’s “golden rule” of investing.

What is Warren Buffett’s golden rule?

The legendary investor’s golden rule is very simple. The Berkshire Hathaway (NYSE: BRK.B) leader famously remarked:

Rule No. 1: Never lose money.

And to highlight just how important this rule is for investing, Buffett then adds:

Rule No. 2: Never forget Rule No. 1.

You might now be thinking that this golden rule isn’t very helpful because it’s so obvious and simple. But there’s actually more to it that first meets the eye.

That’s because when investing in ASX shares, it can be very tempting to chase big gains by investing in companies that people on message boards or Reddit (NYSE: RDDT) groups are touting as the next big thing and a way to get rich quickly.

Time and time again investors get sucked into these types of investments. And time and time again they will destroy significant wealth buying these highly speculative ASX shares.

You only need to look at companies like Brainchip Holdings Ltd (ASX: BRN) and Weebit Nano Ltd (ASX: WBT) to see this. Both of these semiconductor companies are attempting to compete with giants such as US$3 trillion Nvidia (NASDAQ: NVDA) in the chip market with comparatively minuscule budgets.

And so far, based on their insignificant revenue generation, they look unlikely to deliver on the grandiose goals that stock spruikers are saying is possible.

This has led to their shares losing approximately 50% and 65% of their value, respectively, over the last 12 months (and significantly more from their highs).

Why it’s important not to lose money

If you lose money, you have an uphill battle to get even again and then to compound your way to significant wealth.

For example, let’s imagine you make a single $20,000 investment into a balance portfolio of high quality ASX shares. If you can generate an average annual return of 10% for the next 30 years, you would end up with a portfolio valued at approximately $350,000.

Now imagine that you start with a $20,000 investment but lose 65% during your first year. At the beginning of year two you will have $7,000. If you now compound this amount for 29 years at 10% per annum, you would end up with an investment portfolio valued at approximately $111,000.

This means that the one gamble you took on a speculative ASX share in the first year has cost you $239,000.

How to grow your wealth

Instead of putting all your money on a speculative ASX share, investors might want to consider putting what they can into a balanced portfolio of high quality shares that have strong business models and sustainable competitive advantages.

This approach has served Buffett well over the years and there’s nothing to say that it won’t serve you equally well.

If you can do this with $500 a month, even starting from zero you would have a nest egg of $1 million in 30 years if you achieve a 10% per annum return. That return is of course not guaranteed but is in line with historical averages. So, it certainly is something to aim for.

Final thoughts

Overall, I think this shows the importance of not losing money recklessly with ASX shares.

Instead, investors ought to consider investing in quality, profitable companies that have sustainable competitive advantages and positive outlooks.

Resist temptation and grow your wealth slowly like Warren Buffett.

The post With nothing in my savings account, I’d use Warren Buffett’s golden rule to build wealth appeared first on The Motley Fool Australia.

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• Nvidia stock is still a great buy — but when should investors sell shares?
• Prediction: This will be Nvidia’s next big move
• Is Nvidia stock a buy after the 10-for-1 stock split?
• Will Apple stock be worth more than Nvidia by 2025?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway and Nvidia. The Motley Fool Australia has recommended Berkshire Hathaway and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

New research shows 54% of Australians have little or no understanding of the tax concessions available within superannuation. This means they may be missing out on thousands of dollars in tax savings.

Women and Gen Zs are particularly affected, according to financial advisory firm Findex.

Its data reveals that 65% of women and 65% of Gen Zs have little to no understanding of tax concessions.

The research also shows that 28% of Australians have never added extra money to their superannuation.

The first thing to learn is that personal superannuation contributions (up to a cap) are taxed at just 15%.

This is far lower than the marginal tax rate that most Australian workers pay. This means that you can save significant money by clicking a few buttons online. Let’s find out more.

You’ll save on tax by adding money to superannuation

Daniel Slabicki, a senior manager at Findex, explains that individuals can make personal concessional (pre-tax) superannuation contributions up to a cap of $27,500 for the 2024 financial year (FY24).

These contributions include the compulsory Superannuation Guarantee payments made by your employer, any salary sacrifice amounts you have arranged, and any extra money you choose to add.

Say you contribute $8,000 of extra funds into superannuation. That money is then taxed at 15% within the fund. This leaves $6,800 to be invested by the fund according to your selected strategy.

When you fill in your tax return, you then claim a tax deduction for the $8,000.

Alex Duonis, a tax advisory partner at Findex, explains the impact:

A high earning taxpayer may obtain a tax deduction at a rate of up to 47.5% in respect of such super contributions but may only pay contributions tax at the fund level of 15%, thus generating a potential immediate tax arbitrage benefit of 32.5%.

It’s important to remember that after depositing your funds, you must fill in a Notice of Intent to Claim or Vary a Deduction for Personal Super Contributions form and send it to your superannuation fund.

The deadline to do this is the earlier of the date you lodge your income tax return and the last day of the income year after the income year in which you made the contributions (typically the following 30 June).

A few things to be aware of…

Slabicki says workers on high incomes should be mindful of the Division 293 tax.

He explains:

An additional 15% tax on concessional superannuation contributions applies to individuals who earn more than $250,000 per annum. High income earners should consider this when contemplating whether to make additional personal superannuation contributions this year.

Slabicki also points out that unused concessional caps from the past five years may be carried forward. This means you may be able to make additional concessional contributions above the $27,500 cap for FY24.

However, the total value of your superannuation must have been less than $500,000 on 30 June of the previous year to use the carry-forward benefit.

Matthew Swieconek, Findex Head of Investment Relations, says superannuation tax concessions allow workers to save more for their retirement in less time.

If you want to give your superannuation a boost, here are more ways to get money into your fund.

The post Saving tax through superannuation: What you need to know appeared first on The Motley Fool Australia.

More reading

• With nothing in my savings account, I’d use Warren Buffett’s golden rule to build wealth
• These ASX shares could rise 25% to ~50%
• 2 outstanding ASX 200 shares to buy and hold for a decade
• Brokers name 3 ASX dividend shares to buy
• What will happen to CSR shares next week?

Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

If you are on the hunt for larger than average returns for your investment portfolio, then look no further.

That’s because the ASX shares listed below have been named as buys by analysts and tipped to rise materially from current levels.

Here’s what brokers are saying about them and just how high they think their shares could climb over the next 12 months:

Capricorn Metals Ltd (ASX: CMM)

Analysts at Bell Potter have put a buy rating and $6.53 price target on this gold miner’s shares. Based on its current share price of $4.46, this implies potential upside of almost 47% for investors over the next 12 months. The broker commented:

CMM is a sector leading gold producer with a strong balance sheet, a management team with an excellent track record of delivery and clear organic growth options to lift group production to 270kozpa. We retain our Buy recommendation.

Cedar Woods Properties Limited (ASX: CWP)

Over at Morgans, its analysts see a lot of value in this ASX property company’s shares. The broker currently has an add rating and $5.60 price target on them. This suggests that upside of 25% is possible between now and this time next year. An attractive 4%+ dividend yield is also expected by its analysts. Morgans commented:

CWP is a volume business and the demand for lots looks to be improving, with margins to invariably follow. CWP’s exposure to lower priced stock in higher growth markets sees further potential to drive earnings. On this basis, we see every reason for CWP to trade at NTA and potentially at a premium, were the housing cycle to gain steam through FY25/26.

Qantas Airways Limited (ASX: QAN) $6.11

Finally, Goldman Sachs thinks that this airline operator is an undervalued ASX share to buy right now. The broker has a conviction buy rating and $8.05 price target on its shares. Based on the current Qantas share price of $6.11, this implies potential upside of 32% over the next 12 months. The broker said:

We forecast a ~24% FY19-24e cumulative uplift in unit revenues (c. 4.4%pa), and ~50% drop-through of QAN’s A$1bn+ structural cost-out program. QAN’s current market capitalisation in line and enterprise value still 5% below pre-COVID levels. As such, we believe QAN is not priced for a generic recovery, let alone prospects for improved earnings capacity. We continue to see upside associated with substantially improved MT earnings capacity.

The post These ASX shares could rise 25% to ~50% appeared first on The Motley Fool Australia.

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• Why are ASX investors so excited by the Qantas share price?
• Qantas share price lifts after nabbing remaining TripADeal stake
• 3 big reasons to buy Qantas shares now
• Leading brokers name 3 ASX shares to buy today
• 2 ASX large-cap stocks that look cheap right now

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Not all S&P/ASX 200 Index (ASX: XJO) shares will stand the test of time.

For various company-specific and macroeconomic reasons, some companies that look promising today will not live up to that promise over the next decade.

Others, on the other hand, will find their products and services enjoying ever-increasing demand. And the best among those will already have a strong growth history behind them, with experienced management and sustainable business models.

It’s these ASX 200 shares that you can buy and then all but forget about it.

With that in mind, we look at two such companies I think investors would do well to buy and hold for the next 10 or more years.

Two quality ASX 200 shares to buy and hold onto

BHP Group Ltd (ASX: BHP) is the first outstanding ASX 200 share to buy and hold for the next decade.

Shares in the global mining giant have gained around 28% over the past 10 years.

While that may not be shooting the lights out in terms of share price gains, BHP has a lengthy track record as a reliable dividend payer. Those dividends and the BHP share price will fluctuate over the coming decade alongside the commodities price cycle.

Despite a sharp retrace in iron ore and coal prices, BHP shares currently still trade on a healthy 5.4% fully franked dividend yield.

And BHP has far more in its portfolio than iron ore and coal. While both commodities will remain in strong demand over the next decade, I think BHP’s growing copper ambitions and its world-class uranium assets will help drive ongoing success for the big Aussie miner for many years to come.

Which brings us to the second ASX 200 share to buy and hold for a decade, data centre developer and operator NextDc Ltd (ASX: NXT).

NextDc doesn’t pay dividends. At least, not yet.

But the NextDc share price has soared around 1,010% over the past 10 years.

Now, I’m not sure it can deliver that same kind of growth over the next decade. But it’s certainly possible.

That bullish assessment for this ASX 200 share is largely based on the ongoing AI revolution.

That’s because AI needs a home, too. The generative artificial intelligence chips that make it all work reside in data centres, and demand for next-generation data centres is booming to meet the requirements of AI technology.

This was reflected in NextDc’s half-year results. Among the highlights, revenue for the six months increased 31% year on year to $209 million, representing a new record high.

And the company is well-capitalised for further growth.

In April, the ASX 200 share successfully conducted a $1.3 billion capital raising to accelerate the development and fit-out of its key data centre assets in Sydney and Melbourne.

The post 2 outstanding ASX 200 shares to buy and hold for a decade appeared first on The Motley Fool Australia.

More reading

• Brokers name 3 ASX shares to buy now
• How many Australians receive dividend income in retirement?
• Here are the top 10 ASX 200 shares today
• BHP share price slips as union takes legal action
• Buy Rio Tinto and these 4 ASX mining stocks in June

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

There are a lot of ASX dividend shares to choose from on the Australian share market.

So many, it can be hard to decide which ones to buy above others.

Well, to narrow things down for you, let’s take a look at three options that brokers have recently named as buys. They are as follows:

IDP Education Ltd (ASX: IEL)

This language testing and student placement company is not usually considered to be an ASX dividend share. However, with its shares sinking like a stone this year due to tough operating conditions, there are now some reasonable dividend yields on offer for income investors. And in time, there’s potential for these yields to become significantly larger.

For the near term, Goldman Sachs is forecasting fully franked dividends of 40 cents in FY 2024, 38 cents in FY 2025, and then 44 cents in FY 2026. Based on its current share price of $15.41, this equates to yields of 2.6%, 2.5%, and 2.9%, respectively.

Goldman also sees huge upside for its shares with its buy rating and $21.75 price target. This is over 40% higher than where its shares currently trade.

SRG Global Ltd (ASX: SRG)

Analysts at Bell Potter think that SRG Global could be an ASX dividend share to buy. It is a diversified industrial services group that provides multidisciplinary construction, maintenance, production drilling and geotechnical services.

The broker is forecasting the company to pay shareholders fully franked dividends of 4.7 cents in FY 2024 and then 6.7 cents in FY 2025. Based on its current share price of 86 cents, this will mean dividend yields of 5.45% and 7.8%, respectively.

Bell Potter currently has a buy rating and $1.30 price target on its shares.

Suncorp Group Ltd (ASX: SUN)

A final ASX dividend share that brokers are positive on this month is Suncorp. It is the insurance giant behind brands including AAMI, Apia, Bingle, GIO, Shannons, and Vero, as well as the eponymous Suncorp brand.

Analysts at Goldman Sachs are also positive on the company and believe some attractive dividend yields await buyers at current levels. The broker is forecasting fully franked dividends per share of 78 cents in FY 2024 and then 83 cents in FY 2025. Based on the current Suncorp share price of $16.39, this will mean dividend yields of 4.75% and 5.1%, respectively.

Goldman Sachs currently has a buy rating and $17.54 price target on its shares.

The post Brokers name 3 ASX dividend shares to buy appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• 4 ASX income stocks with big dividend yields to buy now
• Guess which beaten-up ASX 200 stock is being bought up by this multi-billion-dollar fundie
• These are the 10 most shorted ASX shares
• 2 of the best ASX dividend shares to buy in June

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group and Idp Education. The Motley Fool Australia has recommended Srg Global. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

You might have heard some ASX talk in recent weeks surrounding CSR Ltd (ASX: CSR) shares. That’s understandable. CSR, after all, is an ASX veteran, having been on the ASX boards for more than six decades.

The company itself has been around for almost 170 years. It has changed significantly over this period, morphing from its roots as a sugar refiner into its current role as a manufacturer of building and construction supplies.

But June 2024 will go down as one of the most significant months in CSR’s long history. That’s because its shares are set to depart from the ASX for the first time in a generation.

As we’ve been covering here at the Motley Fool, CSR has been in the middle of an acquisition courtship over the past few months. Back in February, we learned that the French company Saint-Gobain was interested in acquiring CSR in full.

What will happen to CSR shares when the company is acquired?

Saint-Gobain made a bid of $9 per share in cash for CSR. The merger proposal was cleared through the usual legal and regulatory motions. Then just yesterday, shareholders accepted the offer at a meeting with a ‘yes’ vote of 98.55%. This means that ownership of CSR will transfer to Saint-Gobain. And CSR shares will disappear from both the S&P/ASX 200 Index (ASX: XJO) and the Australian share market.

It will be quick too. CSR’s last day on the ASX has been set for next Wednesday, 19 June. After that date, the shares will be suspended from trading.

On 1 July, existing CSR shareholders will then receive the 12 cents per share fully franked dividend that CSR revealed earlier this month. Those shareholders will then receive their $8.88 per share ($9 minus the value of the dividend) in cash from Saint-Gobain on 9 July in exchange for their shares. At this point, CSR will become the sole property, and a division of Saint-Gobain.

In terms of the ASX 200 Index, CSR’s spot in this exclusive club will be taken up by financial stock Judo Capital Holdings Ltd (ASX: JDO) prior to the commencement of trading on Thursday, 20 June.

So CSR’s long ASX history is set to come to an end in under a week. Maybe the company will return to the Australian stock market one day. But for better or worse, come next week, there will be one less share for ASX investors to buy on our local markets.

The post What will happen to CSR shares next week? appeared first on The Motley Fool Australia.

More reading

• Why Boss Energy, Judo Capital, Life360, and Paladin Energy shares are pushing higher
• 2 ASX 200 shares with ex-dividend dates next week
• 7 ASX All Ords shares rocketing higher while the market sinks
• 5 things to watch on the ASX 200 on Wednesday
• Guess which 7 ASX 200 shares are smashing new 52-week highs today

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Investing in companies is more than just buying stocks.

It’s also about partnering with businesses that value their shareholders. If you think about it this way, how much better is it to partner with companies that treat their shareholders like royalty?

A solid dividend policy and track record are excellent indicators of a company’s commitment to sharing profits directly with its investors.

Moreover, these dividend-paying companies not only offer consistent income to their shareholders but also showcase strong financial health and stability.

This article delves into two ASX-listed shares that exemplify strong commitments to their shareholders by assessing financial metrics such as payout ratios, franking credits, and dividend growth history.

Washington H Soul Pattinson & Company Ltd (ASX: SOL)

The first company that comes to mind is Washington H Soul Pattinson, also known as Soul Patts. The company stands as a testament to longevity and reliability in the Australian market.

Since its listing in 1903, this diversified investment house has consistently rewarded its shareholders with dividends, highlighting its commitment to investor returns.

Soul Patts has paid dividends every year since its inception over a century ago. And it has increased its total annual dividends for 24 consecutive years since 2000 at a compound annual growth rate (CAGR) of 9.6%. Notably, between FY21 and FY23, it boasted an impressive 18.5% CAGR in its dividend payment growth.

Over the last five years, its payout ratios have mostly moved between 50% and 60%. With a payout ratio hovering around 50%, Soul Patts strikes a balance between rewarding shareholders and retaining earnings for future growth.

Investors benefit from 100% franking on dividends, a policy that has been consistently maintained for the past two decades. These franking credits provide nice tax benefits to investors.

The good news is Soul Patts shares are attractively valued after their recent fall, as my colleague Tristan highlighted.

The Soul Patts share price was $32.39 at the close of trade on Friday, near its price a year ago after a recent decline. It offers a fully franked dividend yield of 2.8%.

Steadfast Group Ltd (ASX: SDF)

Steadfast is a premier insurance brokerage network in Australasia, offering a comprehensive range of insurance and risk management services.

Since its initial public offering (IPO) in 2013, Steadfast has demonstrated strong dividend growth, increasing its annual dividend payments from 4.5 cents per share (cps) to 15.75 cps in the last 12 months to March 2024. This growth reflects the company’s solid earnings performance as well as its dedication to returning profits to its shareholders.

With a payout ratio of 76%, Steadfast ensures a substantial portion of its earnings is distributed to shareholders while keeping some for its future growth needs.

Like Soul Patts, Steadfast provides 100% franking credits on its dividends, making them particularly attractive to investors seeking tax-effective income streams.

Steadfast’s impressive track record of dividend growth, combined with its high payout ratio and fully franked dividends, underscores its robust financial health and shareholder-friendly policies.

This makes Steadfast Group a compelling choice for investors seeking both income and growth potential in the insurance sector.

Using S&P Cap IQ data, Steadfast shares are trading at approximately 20x FY24’s estimated earnings, which is inexpensive compared to its history and industry peers.

The Steadfast share price was $5.39 at Friday’s close, down 7% year-to-date after surging almost 60% over the last five years. It offers a dividend yield of 2.9%.

The post 2 ASX shares with shareholder-friendly policies appeared first on The Motley Fool Australia.

More reading

• Brickworks share price jumps on big Soul Patts news
• Can Soul Patts shares beat the market over the next 12 months?
• Down 9% in a year, is it time to buy this ASX 200 dividend stock?
• 3 of the best ASX blue chip shares to buy in June
• Top ASX shares to buy in June and hold for retirement

Motley Fool contributor Kate Lee has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Steadfast Group and Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

When you think of investing in artificial intelligence (AI) stocks, it’s probably global tech giants like Nvidia that first spring to mind. However there are a whole raft of companies outside the tech space that are also pivoting their businesses to capitalise on the benefits of AI.

For example, many retailers are using AI to transform the way they interact with customers. Med-tech companies are pioneering advancements in diagnostics and treatments using the new technology. Real estate companies are cashing in on the surging demand for warehouse space. Even energy providers are looking to benefit from the increased demand for power to fuel AI technologies.

Whether you’re looking to jump on the AI investment bandwagon by buying a traditional ASX tech stock or sneak aboard via a less obvious path, you’re in luck!

Because we asked our Foolish writers which ASX AI stocks they think offer the best buying right now.

Here is what they said:

8 ASX that could be set to benefit from the AI megatrend (smallest to largest)

• IPD Group Ltd (ASX: IPG), $440.40 million
• Dicker Data Ltd (ASX: DDR) $1.75 billion
• Life360 Inc (ASX: 360), $3.15 billion
• Betashares Nasdaq 100 ETF (ASX: NDQ), $4.89 billion
• AGL Energy Limited (ASX: AGL), $6.87 billion
• Sonic Healthcare Ltd (ASX: SHL), $12.17 billion
• Pro Medicus Limited (ASX: PME), $13.70 billion
• Goodman Group (ASX: GMG), $67.93 billion

(Market capitalisations as of market close 14 June 2024).

Why our Foolish writers say these ASX AI stocks are smart long-term buys

IPD Group Ltd

What it does: IPD Group distributes electrical and automation solutions in Australia. With more than 70 years of experience, it offers services including power distribution, industrial control, renewables, and testing. The company supports various sectors, such as power generation, infrastructure, and commercial facilities, leveraging renowned global brands like ABB and GE.

By Kate Lee: In March this year, Tesla boss Elon Musk predicted the rapid expansion of AI and electric vehicles (EVs) would lead to supply crunches in electricity and transformers as early as 2025. AI computer systems consume significant amounts of electricity, and the AI boom will inevitably drive higher demand for data centres, which also rely heavily on electrical power.

The anticipated supply crunch fueled by AI-related demand could exacerbate the country’s already-strained power supply. As reported by The Australian last month, the Australian Energy Market Operator (AEMO) warned of potential power shortages in New South Wales and Victoria due to delays in new transmission lines and renewables projects.

I think potential AI-fuelled energy shortages may present IPD Group with a growth opportunity as the industry faces the need to upgrade the current electricity supply grid and move to greener energy sources.

IPD Group is not only a distributor of various electric systems but also aims to become a one-stop shop for solar energy systems through its recent acquisition of Addelec and Gemtek.

Two weeks ago, IPD Group provided a bright outlook for FY24. The company expects to report earnings before interest, tax, depreciation and amortisation (EBITDA) between $39 million and $39.5 million, implying 42% growth from a year ago at the midpoint. These projections exclude costs from the acquisitions of EX engineering and CMI Operations. 

With the company’s exposure to data centres, solar energy systems, and electricity testing, I believe IPD Group is well-positioned to benefit from the anticipated power shortages led by the AI revolution.

The IPD Group share price is down 20% from its all-time high of $5.42 in February this year. Based on trailing earnings, the company is trading at a price-to-earnings ratio of 21x.  

Motley Fool contributor Kate Lee does not own shares of IPD Group. 

Dicker Data Ltd

What it does: Dicker Data is in the business of wholesale distribution of computer hardware and software. It has specialised exposure to the AI segment, boasting major relationships with such AI giants as Nvidia and Microsoft.

By Zach Bristow: As an investor focusing on AI stocks, Dicker Data has caught my attention in 2024. Following a sharp pullback in its share price over the last six months, it stands out as my top AI stock pick for June. 

Why? Well, I think Dicker Data has several things going for it right now.

For one, the company recently reported it’s in a “leadership position in the artificial intelligence arena”, flaunting its competitive advantage as “the only end-to-end Nvidia distributor” in the region and “the number one distributor” of Microsoft’s Copilot program.

Dicker Data stock was also recently upgraded by Goldman Sachs to a ‘neutral’ rating with a $9.85 price target — slightly above the current share price. The reasons for the upgrade were cited as being Dicker Data’s defensive revenues and strong balance sheet – arguably standout attributes in the ASX tech sector.

The company has also grown its operating margins in the last 12 months to 4.8% from 4.4%. So even if broad economic growth was softer going forward, the company was positioned for earnings growth, Goldman said. 

Tailwinds for this earnings growth are expected to emerge from a recovering PC market in the second half of CY 2024. 

With exposures to such colossal tech giants as Nvidia and Microsoft, the extent of Dicker’s recent selloff is too deep, in my opinion. I think this makes Dicker Data shares – trading at a price-to-earnings (P/E) ratio of 20 times – appear fairly valued relative to peers.

Motley Fool contributor Zach Bristow does not own shares of Dicker Data Ltd.

Life360 Inc

What it does: Based in the United States, Life360 develops software that’s largely used for location sharing. The company’s smartphone app is favoured by families looking to track their children’s locations or to help keep elderly people and folks with special needs safe.

By Bernd Struben: The Life360 share price has surged 99% year to date, and I expect there are more outsized gains to be reaped in the years ahead.

The company has been rapidly growing its customer base. As at 31 Match, Life360 reported servicing some 66 million monthly active users in more than 150 countries.

Earlier this month, the ASX AI stock pulled off a successful Nasdaq initial public offering (IPO). The broader exposure and increased capital available to the now dual-listed company should support ongoing growth.

And the AI revolution could well help supercharge that growth.

At the end of May, Morgan Stanley noted, “We see Life360 as having access to huge volumes of user data, from personal details to daily habits, driving patterns and behaviours.”

With all that AI-friendly data at hand, the broker said it saw significant long-term potential for Life360 “in terms of both monetisation and user experience of consumers being served compelling offers”.

Motley Fool contributor Bernd Struben does not own shares of Life360 Inc.

Betashares Nasdaq 100 ETF

What it does: The BetaShares Nasdaq 100 ETF is an exchange-traded fund (ETF) that tracks the largest 100 non-financial companies on America’s Nasdaq stock exchange.

By Sebastian Bowen:  It might seem strange to think of this index fund as an artificial intelligence stock, but hear me out. The Nasdaq stock exchange is one of the two major exchanges over in the United States. It is well-known as the home of choice for almost all of the US’ big tech giants. 

An investment in this ETF is an investment in the likes of Apple, Microsoft, Alphabet, Nvidia, Meta Platforms, Amazon, Netflix, and Tesla. 

These stocks happen to be the largest movers and shakers in the AI space today. And you can get a slice of all of them using this simple index fund. In fact, for every $1 invested in the NDQ ETF today, around 8 cents each will go towards Apple, Microsoft, and Nvidia shares, respectively.

As such, if one was seeking easy exposure to a range of world-class AI stocks this June, I would look no further than the BetaShares Nasdaq 100 ETF.

Motley Fool contributor Sebastian Bowen owns shares of Apple, Microsoft, Alphabet, Meta Platforms, Amazon, Netflix, and Tesla.

AGL Energy Limited

What it does: AGL is one of Australia’s largest energy generators, with some coal generation including Loy Yang A and Bayswater. It’s also one of the country’s largest energy retailers, with around 2.4 million customers, as at 31 December 2023. 

By Tristan Harrison: Earlier this year, Yukio Kani, the CEO of Japan’s largest power provider, said that data centres were “very hungry caterpillars”, according to reporting by the Wall Street Journal.

The Australian Financial Review also recently reported that data centres were already using 5% of Australia’s electricity. Large-scale construction around the country could see data centre capacity more than double by the end of the decade, with an increase from 1,050MW to 2,500MW. That would equate to growth of 13% per year.

Thus, the surge in AI, along with Australia’s rising population and the long-term adoption of electric vehicles, could lead to significant energy demand increases in the coming years.

As one of the largest players in the Australian energy market, AGL could benefit greatly from this growing demand.

Furthermore, while national energy demand is predicted to rise, coal energy generation is scheduled to be taken offline over the next decade or so. Less electricity supply could lead to rising electricity prices and, ultimately, stronger profits.

According to UBS estimates, the AGL share price is currently valued at approximately 8x FY27’s estimated earnings.

While I don’t currently own AGL shares, I’m seriously considering buying some in the coming weeks for the reasons outlined above. 

Motley Fool contributor Tristan Harrison does not own shares of AGL Energy Limited.  

Sonic Healthcare Ltd

What it does: Sonic Healthcare is ubiquitous in the pathology, laboratory, and radiology domain. The company is a truly global business, with operations in countries such as the United States, Australia, Germany, and the United Kingdom. While artificial intelligence may not be what Sonic is known for, innovation has long been a part of its DNA.

By Mitchell Lawler: Worldwide, healthcare costs are ballooning following the latest bout of inflation. 

In Australia, hospital operator Ramsay Health Care (ASX: RHC) runs on a paper-thin margin of 1.4% as reimbursements fail to keep pace with rising costs. Sonic Healthcare has also felt the squeeze, with revenue from its services on the Medicare Benefits Schedule (MBS) declining in real terms. 

It’s clear companies need a way of enhancing productivity to grow profitability in this situation. 

Sonic Healthcare is making strides in AI-led improvements. For example, Franklin.ai is a joint venture aiming to introduce AI to pathology for improved scaling. Likewise, PathologyWatch is a recent acquisition that is developing AI-powered melanoma detection. 

The current strain on healthcare companies may benefit Sonic Healthcare as it utilises AI to potentially outperform its competitors. 

Motley Fool contributor Mitchell Lawler owns shares of Sonic Healthcare Ltd.

Pro Medicus Limited

What it does: Pro Medicus is one of the world’s leading health imaging technology companies. Its crown jewel is the Visage platform, which is a complete solution for all an organisation’s imaging needs.

By James Mickleboro: I think Pro Medicus could be a great option for investors looking for exposure to the AI megatrend.

This is because the company is leveraging artificial intelligence to make its industry-leading platform even more powerful. 

In addition, there are revenues that the company can generate from AI that it would not ordinarily be able to capture. In fact, Goldman Sachs estimates that “AI opens an incremental US$620mn TAM [total addressable market] today.”

And, with the broker predicting this TAM to grow at a +34.7% compound annual growth rate (CAGR), it believes Pro Medicus is well positioned to “take share as the incumbent viewing platform across many large, and likely early adopters of new technology.”

This is partly why the broker currently has a buy rating and a $136.00 price target on the company’s shares.

Motley Fool contributor James Mickleboro owns shares of Pro Medicus Limited.

Goodman Group

What it does: Goodman is Australia’s largest real estate investment trust (REIT), with a huge global property portfolio worth $80.5 billion.

By Bronwyn Allen: Goodman Group is an industrial property specialist and is seeking to capitalise on the AI megatrend by building large, high-quality data centres and expanding its global power bank.

Data centres currently make up 40% of the group’s $12.9 billion development pipeline, and it’s reviewing additional sites for potential data centre use now. Goodman’s global power bank totals 4.3GW, with 2.2GW not yet secured but in the advanced stages of procurement.

The company said its strong balance sheet was enabling it to continue buying and developing high-tier data centres in sought-after locations. Last month, Goodman issued its third-quarter update and upgraded its FY24 guidance for a second time. The company now expects operating earnings per share (EPS) growth of 13% in FY24. 

Motley Fool contributor Bronwyn Allen owns shares of Goodman Group.

The post Top ASX AI stocks to buy in June 2024 appeared first on The Motley Fool Australia.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon, Apple, BetaShares Nasdaq 100 ETF, Goldman Sachs Group, Goodman Group, Ipd Group, Life360, Meta Platforms, Microsoft, Netflix, Nvidia, Pro Medicus, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF, Dicker Data, and Ipd Group. The Motley Fool Australia has recommended Alphabet, Amazon, Apple, Goodman Group, Meta Platforms, Microsoft, Netflix, Nvidia, Pro Medicus, and Sonic Healthcare. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Idp Education and Life360. The Motley Fool Australia has positions in and has recommended Smartgroup. The Motley Fool Australia has recommended Flight Centre Travel Group and HomeCo Daily Needs REIT. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.